KIERAN GILBERT: With me on the program this morning, the Shadow Assistant Treasurer, Andrew Leigh and also the Assistant Minister for Social Services, Mitch Fifield. Gentleman, good morning to you both. Mitch Fifield, first to you on this Japanese arrangement, obviously the free trade agreement looking good and the Prime Minister hopeful but he's also looking to secure closer defence ties. This comes just a couple of days out from his visit to Beijing, there could be a few sensitivities to smooth out when he arrives in China, just a couple of days from now?

MITCH FIFIELD: Well Kieran, in 2007 John Howard entered into a security agreement with Japan, a statement that we were looking to have closer defence relationship. What the Prime Minister is working on is building upon that. We’re looking to enter a closer relationship in defence, science and material. Australia is very supportive of Japan adopting a more normal security posture. They have been an exemplary international citizen for the past 50 years so I think what we’re seeing is just a natural evolution.

GILBERT: Andrew Leigh, is it fair enough for the PM to be pursuing this? He is going to be the first foreign leader to address a security council meeting of the Japanese security council. Is that going too far in your view or is what Mitch Fifield and the Prime Minster saying correct, can you nurture one friendship while not alienating someone else?

ANDREW LEIGH: Mitch I think reflects the fact that much of this is bipartisan policy Kieran, and certainly the security ties were something worked on during the Labor time as indeed was the trade deal. I remember visiting Tokyo last year and in senior government meetings pushing the case for a trade deal. We need to be careful on both fronts. Labor won’t be backing a trade deal at all costs and in the area of security, we need to make sure that we’re sensitive to the impacts on our Chinese friends. I think Rory Medcalf’s piece this morning was good on this in terms of recognising that Australia needs to be playing a sophisticated game in Asia.

GILBERT: Mitch Fifield, I’ve just received a text message from a colleague in the same hotel as Andrew Robb, the Trade Minister, apparently a grin ear to ear. He said there will an announcement of significance later today. It sounds like they might have got there after all.

FIFIELD: Well, I guess we’ll have to look very closely at the Prime Minister’s body language later today but free trade is a good thing. We have complementary assets and resources Australia and Japan. We are a good provider of agricultural and resource products to Japan. They are a good supplier of cars and high technology to Australia. So, we know that Andrew Robb only enters into agreements that are in the national interest. He’s had a pretty good strike rate as Trade Minister so far. Let’s wait and see what they day holds.

GILBERT: Andrew Leigh, as an economist yourself, if the Japanese do compromise and halve the beef tariff which currently sits at 38.5%. If they halved it to 19% that would make a big difference. This FTA some estimates suggest could be worth $40 billion to Australia over the next decade.

LEIGH: Lower trade barriers are clearly good for Australia Kieran, and an as economist you wouldn't expect me to argue anything different. The thing we need to make sure though is that Australian jobs are looked after. We need to be wary about things like investor-state dispute clauses which would allow private firms to take the Australian government to court and we need to make sure the totality of the agreement is good and fits within a multilateral architecture. Bilateral agreements are always second best to actually doing a broad, worldwide trade deal.

GILBERT: Let’s take a break and when we come back let’s take a look at the wash-up of the WA Senate rerun. Stay with us on AM Agenda this morning, thanks for your company.

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GILBERT: This is AM Agenda, thanks for your company. With me this morning Andrew Leigh and Senator Mitch Fifield. Senator Fifield the WA Senate re-run, not a great result for either of the major parties, in fact when you combine the primary votes of the two big parties its under 60% of the overall vote over there in the west. Is this a longer term trend that we're seeing here, that people are being attracted to the minor parties more and more?

FIFIELD: The weekend was a by-election and the result for the Government was pretty typical of by-election results, in fact it was a little better than the average. We've still got a lot of pre-poll and postal votes to count so we will see what the final result is. But look, I think we've got to recognise that the Coalition received the largest vote of any party at the election in Western Australia. We have 12 of the 15 seats. There is no doubt that there is a message from western Australia, that they want the carbon tax gone and they want the mining tax gone. Labor can take no comfort from this particular result. They had a swing against them. This is the second bi-election since the general election that the Opposition have had a swing against them. This is unprecedented.

LEIGH: Well the swing against Labor was smaller than the swing against the Liberal Party in Western Australia, Kieran.

GILBERT: But as Senator Fifield says, normally in by-elections oppositions get swings to them, not away from them. Something is going wrong here isn't it?

LEIGH: But this is no ordinary by-election. I mean this is unprecedented and one of the challenges we always knew we were going to face was that low voter turnout. I'm still pretty confident that we'll get Louise Pratt over the line. She’s a good friend and a great senator and I think the below the line votes will favour Louise, so I’m keeping my fingers crossed there.

GILBERT: Well in terms of her counterpart, perched on number one on the Senate ticket didn't help her cause too much did he, by bagging her basically a few months ago?

LEIGH: As I understand it, Joe Bullock's apologised for those comments. They certainly weren't helpful, you’re right about that.

GILBERT: Now let’s go to Senator Fifield again on this senate re-run because if you look at the Palmer Party it shows money works doesn't it? Advertising, you might bag him as much as you like for spending so much money, but the advertising obviously worked.

FIFIELD: I think everyone who works in full-time politics knows that name ID for candidates or also name ID for political parties is important, and there is a pretty high correlation between that and the propensity of people to vote for you. It looks like Mr Palmer spent more than the combined ALP and Coalition advertising budget, so obviously if you have got the capacity to raise a profile that puts you in a better position to get votes. But, Kieran look, from where we stand we are going to be treating the new senate with respect. We will work with the new senate, but in return we expect that the new senate will respect the mandate that the Coalition received at the September election.

GILBERT: In hindsight do you think that it was smart for the Prime Minister to criticise Clive Palmer, saying he was buying seats? Now you've got to work with him and very closely to get your agenda through.

FIFIELD: Well look, elections are a contestable environment and all candidates put their best foot forward and spruiked themselves. The election has concluded but we don't yet know the result. It may be a couple of weeks before we know the final position as to whether Linda Reynolds is successful, I hope she is. The election is essentially over now and we look to the new senate, we will be working constructively with the new senate to get the repeal of the carbon tax and to get the repeal of the mining tax. There’s still an opportunity for the Australian Labor Party to come on board and heed the words of Mark Bishop who basically says that the ALP is talking Martian to Western Australian voters.

GILBERT: Ok, well let’s get Andrew's response but also I want to ask you, you can respond to Mitch Fifield on that, but also in terms of spending it does seems a bit hypocritical if major parties criticise Palmer for spending so much, which was obviously effective getting more than 12% of the primary vote when Labor and the Liberal Party for years have spent a lot of money on election campaigns.

LEIGH: And the great irony of this of course Kieran is that Tony Abbott was quite happy to take Clive Palmer’s millions when it was the Liberal-National Party spending that money in Queensland. It's only now that Mr Palmer is spending the money on himself that suddenly Mr Abbott is concerned about the corrosive effects of money on politics. It’s an issue that Australia will face with rising inequality. You see this is in the US with the Koch brothers increasingly having a highly influential role in the US Republican Party.

GILBERT: Now finally on the Labor reforms, obviously something needs to be done. Senator Fifield mentioned Mark Bishop, but the Opposition leader was going to give a speech today, he can't for family reasons. But he’s saying that you shouldn't have to be a member of a union to be a member of the ALP, and also wanting to extend the leadership reforms in terms of electing leaders that we have seen federally to the state level. Your thoughts, does that go far enough?

LEIGH: The big story of Australian democracy has been progressives wanting to expand the franchise against conservative opposition. I think we have to do that in our own party too Kieran. We were a party that used to command one in a hundred Australian adults [as members]. Now we get around one in three hundred. That collapse is common across the main parties. We’ve led the other parties in allowing our members to select the leader. I think opening up the party to small business people will be important too, and perhaps we ought to think about things like for example, using party member preselections where the membership is strong but when membership falls below a certain threshold, perhaps looking to community primaries. All of those things ought to be on the table.